LONDON, Oct 1 - Manufacturers in Europe and Japan won more orders and made more goods in September, according to surveys on Wednesday, going some way to offset doubts about the strength of a U.S.-led economic recovery. surveys showed that manufacturing businesses in Japan expanded at their fastest pace in 15 months in September and that euro zone manufacturing unexpectedly returned to growth for only the second time in a year. Meanwhile, the Bank of Japan's "tankan" survey reinforced a picture of growing confidence, showing that the number of companies feeling better about business conditions outnumbered those that were gloomy for the first time in almost three years.
"It seems to be more of a consumer driven upturn... in Europe, Asia and the United States," said Chris Williamson at NTC Research, which compiles the Japanese and European manufacturing surveys for . But financial markets will be looking for reassurance later on Wednesday from the equivalent survey of U.S. manufacturers. Major stock indices fell and safe-haven bonds soared on Tuesday when U.S. consumer confidence data and a bellwether survey of Midwest manufacturers both showed surprising weakness. The overall U.S. manufacturing survey, compiled by the Institute for Supply Management, is due at 1400 GMT and had been forecast to rise a little further above the 50 line that divides growth from contraction after registering 54.7 in August. However, some analysts were revising their forecasts downwards after Tuesday's data.
The stronger euro zone manufacturing data buoyed the euro, which was trading near $1.17 at 1115 GMT, but German exporters said they feared that if the currency went on rallying against the dollar above $1.20 it could price them out of new contracts.
RATES ON HOLD
The euro zone outlook was also dimmed a little by data showing German retail sales fell more sharply than expected during an August heatwave, while a French consumer confidence survey held steady in September at the same low level registered since May. However, the manufacturing survey showed German industry rebounding in September. "New German orders show there is a global demand pick-up and more importantly that there is a domestic demand pick-up," said NTC's Williamson. The overall euro zone index jumped above the crucial 50 line to 50.1 in September from 49.1 in August and the most forward-looking component, new orders, jumped to 52.0. In Britain, a companion survey showed strengthening growth in manufacturing at 52.9 in September from 52.2 in August and even some job creation as the sector reversed a five-year trend of job cuts. In Japan, the headline manufacturing index rose to 53.0 in from 52.5 in August, although the survey gave a mixed picture of export demand, with orders from the rest of Asia offsetting signs of weakness in sales to the United States and Europe.
Job cuts continued to hold back the euro zone index and economists said that, while expectations of further interest rate cuts from the European Central Bank have faded, official euro zone rates are unlikely to rise from 2.0 percent in the near future either. "They'll still keep rates at this low level for a considerable amount of time because there's a lot of uncertainty," said Elwin de Groot at Fortis Bank in Amsterdam. "We've seen some mixed figures in the U.S. lately, so overall we're seeing a gradual improvement but it's not going to be a very swift recovery."//